If You Want Your Credit Cards to Save You Money, You Must Follow These 6 Rules

Don’t believe those people who tell you credit cards are creations of Satan. That’s like saying red wine should be banned. They’re only dangerous in the hands of the stupid. If you don’t fall into that camp, it’s actually better to use your credit cards rather than cash for every single thing you buy.

But to use credit cards the smart way, you need to play by the rules. Slip up just once and a huge chunk of your cashback savings disappears just like that. Here’s a checklist of things to do in order to make credit cards work for you, not against you.

1. Pay your bill in full

Too many people make the mistake of thinking that so long as they pay the minimum sum on their credit card bills, they’re in the clear. Well, guess what, paying the minimum sum just means you don’t have to pay a penalty. But it doesn’t excuse you from continuing to pay interest on your credit card balance. And credit card interest is ridiculously high… and rising. In order to benefit from your credit card spending, you need to pay off every single cent each and every month.

2. Pay on time every time

Oops! You totally forgot about your credit card bill until 24 hours after payment was due. But never mind, you’re 1 day late only, right? Wrong. Any lateness at all, no matter how minor, gets you slapped with a late payment penalty right away, plus your credit score takes a hit.

And yes, that means you might get slapped with a $50 late payment charge for not paying your bill on a $10 balance, plus interest. So it’s really, really important you pay your bills on time each and every time. Which leads us to our next point….

3. Use interbank GIRO to pay your bills

If you have multiple credit cards for multiple types of purchases, it’s going to be a real pain trying to keep track of and pay the various bills. The easy way to handle this is to set up interbank GIRO payment for all your credit cards and link it to a savings account. That way, you never have to worry about remembering to pay your bills. In addition, you also get a nice record of your monthly spending, since all bills will be paid from the same bank account.

4. Use the right credit cards for the right purchases

You only really benefit from your credit cards if you’re using them optimally. That means you know which credit cards will give you the best benefits when you book air tickets, when you buy groceries, when you shop online, when you dine out and so on. Create a spreadsheet to keep track of which cards to use for what if you have to.

If you’re not sure of what the “right” credit card is for you (and there’s certainly no single magic card that’s going to do the trick for everyone), make sure you compare what’s available first, so that you ensure you get the right card to match your lifestyle needs.

5. Claim your rewards

Amassing credit card rewards isn’t quite the same thing as piling up gold coins in a vault à la Scrooge McDuck. Most rewards expire after some time. And in the event that you decide to cancel the card to avoid having to pay the annual fee, you can kiss your painstakingly collected rewards goodbye. So monitor when your rewards points expire, as well as when you are going to be charged the annual fee, and make sure you claim all your rewards before either of the above happens.

6. Always ask for a waiver of the annual fee

Credit card companies know you’re going to ask for a fee waiver. In fact, they expect you to. So if you don’t bother asking for one, you’re either very lazy or very careless. However, just because you ask for a fee waiver doesn’t mean you’ll necessarily receive one, so you’ll have to be prepared to cancel the card and reapply for it at a later date. Some companies have started offering 50% fee waivers in exchange for some kind of freebie or benefit. Most of the time, though, if you have a good credit score it’s still cheaper to cancel the card, wait for a bit and then reapply.

Do you ever break any of the above rules? Tell us why that happens in the comments!

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In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.